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Showing posts with label SEBI Issue ICDR. Show all posts
Showing posts with label SEBI Issue ICDR. Show all posts

Tuesday, December 7, 2010

File @ SEBI Regional office for Issue size UPTO 100 crores for prescribed States with New Delhi, Ahmedabad, Chennai & Kolkata

SEBI extends the role of its Regional offices to accept applications for public issues under ICDR regulations vide CIR/CFD/DIL/9/2010 dated 13th October 2010

When issue size is 100 crores or less

SEBI, New Delhi office for Companies proposed to be listed in Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Uttar Pradesh, Chandigarh, Delhi & Uttarakhand

SEBI, Kolkata office for Companies proposed to be listed in Assam, Bihar,
Manipur, Meghalaya, Nagaland, Orissa, West Bengal, Tripura, Arunachal Pradesh, Mizoram & Jharkhand

SEBI, Chennai office for Companies proposed to be listed in Andhra Pradesh, Karnataka, Kerala, Tami Nadu & Puducherry

SEBI, Ahmedabad office for Companies proposed to be listed in Gujarat & Rajasthan.

For other states & when issue size is more than 100 crores

At SEBI Bhawan, Mumbai.

Merchant Bankers are accordingly advised to file the draft offer documents / offer documents with the concerned office of SEBI, based on the estimated issue size accordingly.

Download Notification.

Monday, December 6, 2010

No preferential allotment to promoter for 1 year on warrant failure, Be a retail investor UPTO 2 lakhs, Advertise filing of offer documents, Uniform allotment in offer to public, Asks company to decide whether partly/fully paid shares - SEBI ICDR 4th Amendment 2010

SEBI Issue of Capital & Disclosure Requirements - ICDR (Fourth Amendment) Regulations, 2010: The amendment includes postal insurance funds as QIB, increases retail investor limit to 2 lakhs [ie, those who will fall in the 35% in net offer category], mandates company to advertise filing of offer documents, clarifies on pending convertible securities before IPO, as usual puts extra responsibility on Merchant banker to certify on advertisements issued in all types of media, unifies allotment in offer to public as 50%-35%-15% (for QIB-Retail-Others), issue to give either part payment or full payment option to investors (& not both) and finally clarifies on eligibility of Preferential Allotment to Promoters or Promoters Group (i.e) if they have sold shares within past 6 months or if they have failed to exercise warrants issued within past 1 year, then such promoters/promoters group becomes ineligible for preferential allotment.

Retail investors/reservation to employees limit extended

Reg 2(ze) “retail individual investor” means an investor who applies or bids for specified securities for a value of not more than  Rs. 2 lakhs (erstwhile limit was Rs. 1 lakh).

Reg 2(zf) “retail individual shareholder” means a shareholder of a listed issuer, who applies or bids for specified securities for a value of not more than Rs. 2 lakhs.

Reg 42(4): The reservation on competitive basis to any employee shall not exceed Rs. 2,00,000/- (erstwhile limit was Rs. 1,00,000)

Reg 2(zd) “Qualified Institutional Buyer” (QIB) has 12 items now:

“(xii) insurance funds set up and managed by the Department of Posts, India.”

In addition to SEBI, Stock Exchange & Merchant banker who publish draft offer documents in their website, the company shall publish the same in dailies

New Reg 9(3): The issuer company either on the date of filing the draft offer document with SEBI or on the next day shall make a public  announcement in one English/Hindi/Regional daily newspaper with wide  circulation about the fact of filing of draft offer document with SEBI and inviting public comments.

Reg 26(5): IPO can be made with FULLY PAID outstanding convertible securities which are required to be converted on or before the date of filing of prospectus.

Same allocation even if minimum public shareholding is 10/25%Reg 43(2): Allocation in net offer to public category shall be:

  • UPTO 50% to QIB
  • Atleast 35% to Retail Investors
  • Atleast 15% to Non-Institutional Investors

(irrespective of whether the offer is made under Rule 19(2)(b) or not [i.e, even if minimum public shareholding is 10%])

Hence, the erswhile limits of 60%, 30%, 10% will  not apply.

Make it fully paid or partly paid & not both

New Reg 54(7):  “The issuer shall give only one payment option out of the following to all the investors -  

(a) part payment on application with balance money to be paid in  calls; or 
(b) full payment on application:

Provided that where the issuer has given the part payment option to  investors, such issuer shall  obtain the necessary regulatory  approvals to facilitate the same.”

Now, Merchant banker shall also certify the Public communications, publicity materials, advertisements and research reports in all medias

New Reg 60(14): “The merchant bankers shall submit a compliance certificate in the format specified in  Part D of Schedule XIII, for the period between the date of filing the draft offer document with SEBI and the date of closure of the issue, in respect of news reports appearing in any of the following media:
(a) newspapers mentioned in sub-regulation (3) of regulation 9;
(b) major business magazines;
(c) print and electronic media controlled by a media group where the media group has a private treaty/shareholders’ agreement with the issuer or promoters of the issuer.”

image

Conditions for Preferential Allotment made more stringent

“Explanation: Where any person belonging to promoter(s) or the promoter group has sold his  equity shares in the issuer during the 6 months preceding the relevant date, the promoter(s) and promoter group shall be ineligible for  allotment of specified securities on preferential basis”.

New Reg 72(3): Where any person belonging to promoter(s) or the  promoter group has previously subscribed to warrants of an issuer but failed to exercise the warrants, the promoter(s) and promoter group shall be ineligible for issue of specified securities of such issuer on preferential basis for a period of one year from the date of expiry of the tenure/cancellation of  the  warrants.

Download the SEBI ICDR 4th Amendment 2010 issued vide No. LAD-NRO/GN/2010-11/19/26456 dated 12th November 2010

Sunday, November 28, 2010

SEBI interprets whether offer to 50 or more persons amounts to public & thereby mandates listing under Companies Act, irrespective of intention to list its securities with Stock Exchange - reading together Section 55A with 73

On 24th November 2010, it happened!!!  SEBI, the watch dog of Indian Capital Market did its part of research on Companies Act to understand the powers which are already vested with it and has come out [barking :-)] with brilliant interpretations. 

SEBI takes a re-look on

Section 55A, 56, 60B, 67, 73 & 81(1A) of Companies Act, 1956

DIRECTIONS UNDER SECTIONS 11(1), 11(4)(b), 11A(1)(b) AND 11B issued under SEBI ACT, 1992 READ WITH REGULATION 107 OF SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS - ICDR) REGULATIONS, 2009 IN THE MATTER OF ISSUANCE OF OPTIONALLY FULLY CONVERTIBLE DEBENTURES (OFCD) BY SAHARA INDIA REAL ESTATE CORPORATION LIMITED (SIREC) AND SAHARA HOUSING INVESTMENT CORPORATION LIMITED (SHICL).  Lets refer SIREC & SHICL as “Company”.

The Company’s point of view

a. OFCD issuance of SIRECL and SHICL do not come under the purview of SEBI as Section 55A of the Companies Act, 1956 delegates the administrative power to SEBI only with respect to the listed public companies and those public companies which are intending to get their securities listed in India. Since the said companies have stated in the RHP filed with the RoC that, they do not intend to get the OFCDs listed in any stock exchanges in India or abroad, the issuance of OFCDs does not come under the purview of SEBI.
Note: OFCD is a security and is convertible into Equity Shares and is not in the nature of “Non-Convertible Debt Security”.

b. Issuance of OFCDs was made on private placement basis and is restricted to a select group (however large, they may be), it ceases to be an offer to the public.
c. When securities are issued to more than 50 persons, by following the procedure laid down under Section 60B of the Companies Act, 1956, by circulation of information memorandum and filing of Red Herring Prospectus (RHP) with the RoC, it would not be necessary to list the securities so offered and the issue shall remain outside the purview of SEBI.

What did SEBI analyse?

a) Whether the impugned OFCD offers have been made to the public and if so, whether listing of the OFCDs, so offered, is mandatory?
b) Whether Section 60B of the Act provides “an alternative route” for raising capital without complying with Section 73 of the Act and other SEBI requirements, as contended by the companies?

What does Companies Act say?

Section 67: The essence of this section is that “who can apply for securities in response to invitation shall be checked to determine whether it is an offer to public” and lays certain criteria for that.

The said Section explicitly states that any reference in the Act or in the articles of a company to offering (or inviting to subscribe) for shares or debentures to the public shall be construed as including a reference to offering them (or inviting them to subscribe) to any section of the public, whether selected as members or debenture holders of the company concerned or as clients of the person issuing the prospectus or in any other manner.

Provisio to Section 67(3) as summarised by SEBI:  Even if an issue is made by way of private placement to 50 or more persons, it would be deemed to be a public issue (“deemed to be a public issue”) irrespective of whether it was offered to public at large or to just a section of the public chosen, in whatever manner.

Further, any further issue of capital, even pursuant to a resolution made under Section 81(1A) of the Act (dealing private placement to select group of persons), is subject to the provisions of Part III of the Act (dealing with Prospectus), if the offer is made to 50 persons or more.

The filing of a prospectus under the Act signfies the intention of the issuer to raise funds from the public. – SEBI infers!!!

Whether listing is mandatory for all public issues?

As per Section 73(1) of the Act, every company intending to offer shares or debentures to the public for subscription by the issue of a prospectus shall, before such issue, make an application to one or more recognized stock exchanges for permission for (listing of) the shares or debentures intending to be so offered to be dealt with in a stock exchange or each such stock exchange.

As per Section 73(2) of the Act, where any listing permission is not applied, as observed in the present case, the companies are required to refund all the money received as subscription within the stipulated time.

The intention of the companies to list or not is immaterial as it is mandated by the Act – SEBI infers!!!

SEBI Order analyses Section 55A & Section 73

The words “intend to get their securities listed” in Section 55A(1) (b) of the Act (which gives the power to SEBI) is clearly synonymous with the words “intend to offer their securities to public” (as per Section 73), as law mandates compulsory listing in case of public issues and specifies that any condition to waive this requirement is void [as per Section 73(4)].

If to 50 or more persons, then to 1000 or more persons!!!

Once the company is mandated to list, it shall comply with the requirements of SEBI ICDR regulation as the debentures are convertible into Equity.  Reading Section 67 with ICDR:

Once the issuer decides to offer its securities to 50 or more persons, then the issue is an offer to public at large, complying with the provisions prescribed in the ICDR Regulations which mentions that an issuer shall not make an allotment pursuant to a public issue if the number of prospective allottees is less than 1000, to ensure there is sufficient liquidity in the scrip post listing.

In such case, it shall file RHP with SEBI atleast 30 days in advance before filing the same with RoC – SEBI infers!!!

SEBI tooks pains to highlight the clauses of ICDR not complied with, in this link:

http://www.sebi.gov.in//cmorder/SaharaAnnexure.pdf

SEBI also claims the Prospectus filed by the company is not fully adequate with requisite legal information.  On analysing the above mentioned violation of Companies Act & some other observations by SEBI on the financials had issued an ad interim, ex-parte Order vide WTM/KMA/CFD/316/11/2010.

The Company claims unlisted companies cannot come under the purview of SEBI

The company deems the order as imprudent and irrational vide its RESPONSE as this order created a confusion among public that Sahara’s IPO is rejected (which is not at all the case though!!!).  Further, in the interest, image and goodwill of entire Sahara India Pariwar, the company has disclosed the details in its RESPONSE.

SEBI’s Order: WTM/KMA/CFD/316/11/2010

Sahara’s Response: RESPONSE

This case may give an answer to the BERMUDA TRIANGLE of what if issue to 50 or more persons but less than 1000 persons

  • Will the company take the Writ route to re-examine the jurisdiction of SEBI with respect to Section 55A read with Section 73?
  • Believe, this cannot have the same HAPPY ENDING with Consent Order at later stages. 

We shall await for the Securities Appellate Tribunal’s (SAT) interesting response. 

Friday, August 6, 2010

Understand Chapter XA of SEBI ICDR Amendment 2010 as to SME Exchange and listing upto 25 crores of capital like Fast track route for small & medium companies

Download the Updated Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as on date. 

In order to lay down the policy for issue, listing and trading of the securities issued by the SMEs, necessary amendments have been made in the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and consequent amendments were made int he following regulations as given below.

SEBI ICDR Third Amendment Regulations 2010, in addition to the amendments made under various clauses, the following updates were made.

After CHAPTER X, the following Chapter shall be inserted, namely:-
“CHAPTER XA
ISSUE OF SPECIFIED SECURITIES BY SMALL AND MEDIUM
ENTERPRISES (SME) – Regulation 106A to 106J

An issuer whose post-issue face value capital does not exceed ten crore rupees shall issue its specified securities in accordance with provisions of this
Chapter.  Kindly note, there is also Micro, Small & Medium Enterprises Development Act which classifies Industries but for such classification, only the investment made in plant & machinery are taken into account whereas under SEBI ICDR the whole capital of the company should be Rs. 10 crores or less

In some cases, even upto Rs. 25 crores [ie, 10 crores to 25 crores] may be considered under this chapter where shareholders agree to Migrate by passing a Special Resolution through postal ballot and can be acted upon if and only if the votes cast by shareholders other than promoters in favour of the proposal amount to at least two times the number of votes cast by shareholders other than promoter shareholders against the proposal. [R:106H].  Kindly note even such companies, if already in SME Exchange have the option to migrate to Main board on satisfaction of the above said conditions. [R:106I]

In cases where companies in SME Exchange [upto 25 crores] is likely to exceed the same due to further issue of shares, then prior to such issue the company shall pass Special Resolution (similar way as mentioned above) and to get in-principle approval for listing in the Main board by complying with all the conditions.

The sub-regulations (1), (2) and (3) of regulation 6 (filing of offer document), regulation 7 (in-principle approval), regulation 8 (documents to be submitted before opening the issue), regulation 9 (draft offer document to be made public), regulation 10 (Fast track issue), regulation 25, 26 & 27 (eligibity requirements for IPO & FPO) and sub-regulation (1) of regulation 49 (Minimum application value between Rs.5000 & 7000) of these regulations shall not apply to an issue of specified securities made under this Chapter.  That means, all other regulation will apply as such with such modifications as necessary, what we call legally as “mutatis mutandis”.

Main Board = Stock Exchanges other than SME Exchange

Nominated Investor = QIB/PE fund who undertakes the under-subscription portion or receive/deliver (which requires prior approval of SME exchanges) during Market making (for 3 years) with the market makers inventory of atleast 5%. Market Maker shall not buy from promoter or persons belonging to promoter group.  [R 106J]  Also, a promoter can offer only such shares which are not locked-in for market making with the prior approval of SME Exchange.

Similar to Fast track Issues (FTI), there is no need to file draft offer documents, instead the final offer documents shall be filed simultaneously with SME Exchanges, RoC and SEBI alongwith  due-diligence certificate as per Form A of Schedule VI including additional confirmations as provided in Form H of Schedule VI.

  1. 100% of offer through offer document shall be underwritten, out of which,
    • 15% shall be underwritten by Merchantbankers
  2. Underwriter shall undertake in case of under-subscritpion and not more than that as mentioned in the agreement.
  3. Nominee Investor shall undertake in case of under-subscription.
  4. Merchant banker is responsible for underwriting & shall give an Undertaking 1 day before opening of issue.
  5. Minimum Application size = atleast Rs. 1 lakh per application.
  6. Minimum Allottees = 50 nos.

In Schedule VI, after Form G, the following form shall be inserted, namely:-
“FORM H
[See regulation 106C(2)]

ADDITIONAL CONFIRMATIONS/ CERTIFICATION TO BE GIVEN BY MERCHANT BANKER IN DUE DILIGENCE CERTIFICATE TO BE GIVEN ALONG WITH OFFER DOCUMENT REGARDING SME EXCHANGE.

ASBA for all, Discounted price for employees, issuer can regulate bids, fti liberalised as to SCN, reservation for other employees also, lock-in preferential issue sica, IDR %: SEBI ICDR Amendments 2010

Download the Updated Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as on date.  There are three amendments in SEBI ICDR Regulations in 2010 which are,

SEBI ICDR First Amendment January 2010

Regulation 58: Abridged prospectus, abridged letter of offer and ASBA.

(5) In all public issues and rights issues, where not more than one payment option is given, the issuer shall provide the facility of ASBA in accordance with the procedure and eligibility criteria specified by SEBI. [earlier it was available only to retail investors]

(6) An application through ASBA form may be made:
(a) in a public issue, by an applicant who:
(i) is a resident retail individual investor;
(ii) is bidding at cut-off, with single option as to the number of shares bid for;
(iii) is applying through blocking of funds in a bank account with the self certified
syndicate banks;
(iv) has agreed not to revise his bid;
(v) is not bidding under any of the reserved categories;
(b) in a rights issue, by an applicant who:
(i) holds the shares of the issuer in dematerialised form as on the record date and has
applied for entitlements and/or additional equity shares in dematerialised form;
(ii) has not renounced his entitlements in full or in part;
(iii) is not a renouncee;
(iv) who is applying through blocking of funds in a bank account with the Self Certified
Syndicate Bank.
[Omitted]

In schedule XI, in Part A, in para (12), in clause (i), the bracket and words “(except ASBA investors)” shall be omitted.

SEBI ICDR Second Amendment January 2010

 

Regulation 29: Differential Pricing

After clause (c), following clause shall be inserted , namely:-

“(d) In case the issuer opts for the alternate method of book building in terms of Part D of Schedule XI, the issuer may offer specified securities to its employees at a price lower than the floor price:
Provided that the difference between the floor price and the price at which specified securities are offered to employees shall not be more than 10% of the floor price.”

In schedule XI, in Part D, [alternate method of book building]-
“(b) The issuer shall disclose a floor price in the red herring prospectus. The issuer may mention the floor price in the red herring prospectus (RHP) or if the floor price is not mentioned in the red herring prospectus, the issuer shall announce the floor price at least one working day before opening of the bid in all the newspapers in which the pre-issue advertisement was released.”

“(c) Investors other than retail individual investors shall bid at any price above the floor price.   Qualified institutional buyers (QIB) shall bid at any price above the floor price.” [as discounted price is allowed to employees, retail investors, etc…]

“(e) Allotment shall be on price priority basis for investors other than retail individual investors.  Allotment shall be on price priority basis for qualified institutional buyers.”

“(f) Allotment to retail individual investors shall be made proportionately as illustrated in this Schedule.  Allotment to retail individual investors, non-institutional investors and
employees of the issuer shall be made proportionately as illustrated in this Schedule.”

“(h) Retail individual investors shall be allotted specified securities at the floor price. Retail individual investors, non-institutional investors and employees shall be allotted specified securities at the floor price subject to provisions of clause (d) of regulation 29.”

“(i)  The issuer may place a cap either in terms of number of specified securities or percentage of issued capital of the issuer that may be allotted to a single bidder.  The issuer may:-
(A) place a cap either in terms of number of specified securities or percentage of issued capital of the issuer that may be allotted to a single bidder;
(B) decide whether a bidder be allowed to revise the bid upwards or downwards in terms of price and/or quantity;
(C) decide whether a bidder be allowed single or multiple bids.”

SEBI ICDR Third Amendment April 2010

Regulation 2(1)

(c)“anchor investor" means a qualified institutional buyer [who makes] an application for a value of ten crore rupees or more in a public issue made through the book building process in accordance with these regulations;

(m) “employee” means a permanent and full-time employee of the issuer, working in India or abroad, [of the issuer or of the holding company or subsidiary company or of that material associate(s) of the issuer whose financial statements are consolidated with the issuer’s financial statements as per Accounting Standard 21], or a director of the issuer, whether whole time or part time and does not include promoters and an immediate relative of the promoter (i.e., any spouse of that
person, or any parent, brother, sister or child of the person or of the spouse);

(zf) “retail individual shareholder” means a shareholder of a listed issuer, who:
(i) as on the date fixed for the purpose of determining shareholders eligible for reservation in terms of [regulation 42] of these regulations, is holding equity shares which, on the basis of the closing price of the equity shares on the recognised stock exchange in which highest trading volume in respect of the equity shares of the issuer was recorded as on the previous day, are worth up to one lakh rupees; and (ii) applies or bids for specified securities for a value of not more than one lakh rupees;

Regulation 8: Documents to be submitted before opening of the issue by Lead Merchant Banker with Draft offer document

(1)(e): a certificate in the format specified in [Part C] of Schedule VII, confirming compliance of the conditions mentioned therein.

Regulation 10: Fast Track issue

(1)(g): no show-cause notices have been issued or prosecution proceedings initiated [by SEBI] or pending against the issuer or its promoters or whole time directors as on the reference date;

Regulation 13: Underwriting

(2) Where the issuer makes a public issue through the book building process, such issue shall be underwritten by book runners or syndicate members:
Provided that fifty per cent. [sixty per cent, if public issue is made with at least ten per cent. public offer under clause (b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957] of the net offer to public proposed to be compulsorily allotted to qualified institutional buyers for the purpose of compliance of the eligibility conditions specified in sub-regulation (2) of regulation 26 and [regulation 27] cannot be underwritten.

Regulation 26: Conditions for IPO

(5) No issuer shall make an initial public offer if [as on the date of registering the prospectus with the Registrar of Companies] there are any outstanding convertible securities or any other right which would entitle any person any option to receive equity shares after the initial public offer: Provided that…..

Regulation 29: Differential Pricing – [as the word “of the issuer” is removed as mentioned below, discounted price can be offered beyond the employees of issuer company also].

(a) retail individual investors or retail individual shareholders or employees[***] entitled for reservation made under regulation 42 making an application for specified securities of value not more than one lakh rupees, may be offered specified securities at a price lower than the price at which net offer is made to other categories of applicants: Provided…

Further, the same is also reiterated in Regulation 55A dealing with Reservation for [its] employees alongwith rights issue by removing the word “its”.

Regulation 42:  Reservations on competitive basis

“(1)(a) employees of the issuer including employees of the promoting companies in case of a new issuer; employees; and in case of a new issuer, persons who are in the permanent and full time employment of the promoting companies excluding the promoters and an immediate relative of the promoter of such companies;”

“(2)(a) employees of the issuer including employees of the promoting companies in case of a new issuer; employees; and in case of a new issuer, persons who are in the permanent and full time employment of the promoting companies excluding the promoters and an immediate relative of the promoter of such companies;”

Regulation 46: Period of Subscription

(1) [Except as otherwise provided in these regulations] a public issue shall be kept open for at least three working days but not more than ten working days including the days for which the issue is kept open in case of revision in price band.

Regulation 70. [Preferential issue to Company under SICA shall be subject to lock-in, though exempt from other preferential issue regulations.]

(1) The provisions of Preferential Issue shall not apply where the preferential issue of equity shares is made:
(a) pursuant to conversion of loan or option attached to convertible debt instruments in terms of sub-sections (3) and (4) of sections 81 of the Companies Act, 1956;
(b) pursuant to a scheme approved by a High Court under section 391 to 394 of the Companies Act, 1956;
(c) in terms of the rehabilitation scheme approved by the Board of Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985:
[Provided that the lock-in provisions of this Chapter shall apply to preferential issue of equity shares mentioned in clause (c).]

Regulation 98: Conditions for issue of IDR

(e) the balance fifty per cent. may be allocated among the categories of non-institutional investors and retail individual investors including employees at the discretion of the issuer and the manner of allocation shall be disclosed in the prospectus. Allotment to investors within a category shall be on proportionate basis:
[Provided that at least thirty per cent. of the IDRs being offered in the public issue {erstwhile it was 30% of the 50%} shall be available for allocation to retail individual investors and in case of under subscription in retail individual investor category, spillover to other categories to the extent of under subscription may be permitted.
Explanation: For the purpose of this regulation, “employee” shall mean a person who,-
(a) is a resident of India, and
(b) is a permanent and full-time employee or a director, whether whole time or part time, of the issuer or of the holding company or subsidiary company or of the material associate(s) of the issuer, whose financial statements are
consolidated with the issuer’s financial statements, working in India and does not include promoters and an immediate relative of the promoter (i.e., any spouse of that person, or any parent, brother, sister or child of the person or of the spouse).]

In Schedule IV,

  • in Part A, for clause (b) with respect to Rights issue, the following shall be substituted, namely:-
    “(b) In case of a rights issue: An alteration as to fees is made.
  • in Part B, for the words “Para 3” , the words “Para 2” shall be substituted.

In Schedule VI,

  • in Form A, for reference title, the following shall be substituted, namely:-
    “[See regulations 8(1)(c), 10(3)(a) and 106C(2)]”
  • (b) in Form D, in the note, for the figure, bracket and word “2(b)”, the figure, bracket and word “1(b)” shall be substituted.

In Schedule VIII,

(a) in Part A, in Para (2), -
(A) in item (VI),-
(I) in sub-item (B), in clause (15), for sub-clause (e), the following shall be
substituted, namely:-
“(e) The underwriting agreement shall list out the role and obligations of each
syndicate member and inter-alia contain a clause stating that margin collected shall be uniform across all categories indicating the percentage to be paid as margin by the investor at the time of bidding.”
(II) in sub-item (D), in clause (2),-
(i) in sub-clause (i), in section (ii), after the words “regulation 2”, the bracket
“)”shall be inserted;
(ii) in sub-clause (j), in section (iv), after the words “regulation 32”, the words
“and regulation 33” shall be inserted;
(iii)in sub-clause (r), after section (xvii), the following shall be inserted,
namely:-
“(xviii) the details of the number of shares issued in ESPS, the price at which
such shares are issued, employee-wise details of the shares issued to
• senior managerial personnel;
• any other employee who is issued shares in any one year amounting to
5% or more shares issued during that year;
• identified employees who were issued shares during any one year equal
to or exceeding 1% of the issued capital of the company at the time of
issuance;
(xix) diluted Earning Per Share (EPS) pursuant to issuance of shares under
ESPS; and consideration received against the issuance of shares.”
(B) in item (VIII),-
(I) in sub-item (D), in clause (3), sub-clause (f) shall be omitted;
(II) in sub-item (E), in clause (8), in sub-clause (j), for the word
“discussed” appearing at the end, the word “disclosed” shall be
substituted;
(C) in item (IX),-
(I) in sub-item (B),-
(i) in clause (12), in sub-clause (a), in section (v), for the mark and
words “(c) or (d)”, the mark and words “(iii) or (iv)” shall be
substituted;
(ii) in clause (16), in sub-clause (b), after the words “loan taken
and before the words “by the promoters”, the words “from the
issuer
” shall be inserted;
(II) in sub-item(C), in clause (2), before the proviso the following
paragraph shall be inserted, namely:-

“In case there are no listed group companies, the financial information shall be given for the five largest unlisted group companies based on turnover.”
(D) in item (XI), in sub-item (I), for the words “letter of offer”, the words “offer document” shall be substituted;
(E) in item (XII), in sub-item (B), in clause (29), in sub-clause (a), for the words “thirty days” appearing after the words “from the date of the closure” the words “fifteen days” shall be substituted;
(b) in Part C, in para (2),-
(A) brackets and letter “(e)” shall be omitted;
(B) item (f) shall be renumbered as “(e)”;
(c) in Part E, in Para (5), in item (VI), in sub-item (C), in clause (6), the following proviso shall be inserted, namely:-
“Provided that such participation shall not result in breach of minimum public shareholding requirement stipulated in the equity listing agreement entered into between the issuer and the recognized stock exchanges where the specified securities of the issuer are listed.”
(d) in Part F, for para (2), the following shall be substituted, namely:-
“(2) However, if the conditions specified in clause (1) in Part E of this Schedule are satisfied, the disclosure requirements specified in the following clauses in Part D of this Schedule, shall not be applicable to such issuer:
(a) Sub-item (B) of item II ;
(b) Sub-item (D) of item III;
(c) Item V;
(d) Item VI;
(e) Item VII ;
(f) Item X;
(g) Item XI;
(h) Item XIV;
(i) Item XV;
(j) Item XVI.”

In Schedule XI,-
(a) in Part A,-
(A) in para 10, for clause (f), the following shall be substituted, namely:-

“(f) Anchor Investors shall pay on application the same margin which is payable by other categories of investors the balance, if any, shall be paid within 2 days of the date of closure of the issue.”
(B) in para 11, -
(I) for clause (a), the following shall be substituted, namely:-
“(a) The margin collected shall be uniform across all categories of investors.”
(II) clause (b) shall be omitted;
(C) in para 12, after clause (i), the following shall be inserted, namely:-
“(ia) The issuer may decide to close the bidding by qualified institutional buyers one day prior to the closure of the issue subject to the following conditions:
(i) bidding shall be kept open for a minimum of three days for all categories of
applicants;
(ii) disclosures are made in the red herring prospectus regarding the issuer’s
decision to close the bidding by qualified institutional buyers one day prior to closure of issue.”
(b) in Part C, in the heading, for the word “INSTUTIONAL”, the word “INSTITUTIONAL” shall be substituted.

Merchant Bankers Regulation Amendment 2010 for SME segment & obligation extended thereof for Chapter XA of ICDR

In the Securities and Exchange Board of India (Merchant Bankers ) Regulations, 1992, through SEBI (Merchant Bankers) (Amendment) Regulations, 2010 vide Notification No. LAD-NRO/GN/2010-11/04/1109 dated 13th April 2010, the following updates were inserted:
(i) in regulation 13A, after the proviso and before the Explanation, the following proviso shall be inserted, namely:-,
“Provided further that a merchant banker, who has been granted certificate of registration under these regulations, may ensure market making in accordance with Chapter XA of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.”
(ii) in regulation 22, after the proviso, the following proviso shall be inserted, namely:-
“Provided further that in any issue made in accordance with Chapter XA of
the Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009 the merchant banker shall, itself or jointly
with other merchant bankers associated with the issue, underwrite at least
fifteen per cent of the issue size.”
(iii) in regulation 27, the following proviso shall be inserted, namely:-
“Provided that complete particulars of any transaction for acquisition of securities made in pursuance of underwriting or market making obligations in accordance with Chapter XA of the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009 shall be
submitted to SEBI on quarterly basis.”

NSE website link of QIP offer documents with shareholding pattern as filed under Clause 35 format

Sub: Disclosure of details of the allottees in the Qualified Institutional Placements (QIP) made by issuer company

SEBI has decided that the details of allottees and the corresponding pre and post QIP issue shareholding in the issuer company may be disclosed on the website of the stock exchanges. Accordingly, this circular is issued in exercise of powers conferred by sub-section (1) of Section 11 of the Securities and Exchange Board of India Act, 1992, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.   Ensure that the details of those allottes in QIP who have been allotted more than 5% of the securities offered in the QIP, viz names of the allottees and number of securities allotted to each of them, pre and post issue shareholding pattern of the issuer in the format specified in clause 35 of the Equity Listing Agreement shall be made available on the website of stock exchanges along with the final placement document.

Source: SEBI/CFD/DIL/LA/1/2010/05/03 dated 5th March 2010

Hence, the new disclosures can be found at

http://www.nseindia.com/content/equities/jp_qipfinal_new.htm

Tuesday, July 13, 2010

Website link thru BSE/NSE to download ASBA forms online with UIN for making public issue applications - SEBI

SEBI is taking steps forward to make a public issue process completely online.

1. It has been decided to make ASBA bid-cum application forms available for download and printing, from websites of the Stock Exchanges which provide electronic interface for ASBA facility i.e. Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The ASBA forms so downloaded shall have a unique application number and can be used for making ASBA applications in public issues. A sample of the form is enclosed at Annexure A

Understand all about ASBA - in public issues, rights issues, by Mutual Funds, by QIB's - an alternate way of investing, SEBI

2. In order that the Stock Exchanges fill up essential details of an issue, the Merchant Banker to the issue shall ensure that the following details are provided to the Stock Exchanges at least 2 days before opening of the public issue:
a. Company Name
b. Type of issue
c. Issue opening date
d. Issue closing date
e. Price/ price band
f. Bid lot
g. Other relevant details
h. Soft copy of prospectus/abridged prospectus
3. The Stock Exchanges shall ensure the following :
a. The details furnished by the Merchant Banker to the issue are duly filled in the ASBA form for a specific public issue, before making the same available on websites.
b. The ASBA form for a specific public issue is made available on the websites of the Stock Exchanges at least one day before opening of the public issue.
c. A unique application number for an issue is generated for every ASBA form downloaded and printed from the websites.  Therefore application made using photocopy of the downloaded form shall not be accepted.
d. Investors have online access to soft copy of the abridged prospectus/prospectus of the public issue.
e. For revisions of bids, investors can take print of a bid revision form.
4. Merchant Bankers and SCSBs are directed to provide a hyperlink to BSE or NSE websites for this facility on their websites.  Links are expected in http://www.nseindia.com/content/ipo/ipo_asba_procedures.htm & http://www.bseindia.com/bookbuilding/asba.asp
5. All intermediaries are directed to comply with the instructions contained in this circular.
6. This circular shall be applicable to all public issues opening on or after July 19, 2010.

Sunday, June 6, 2010

New Rule 19(2)(b) & 19A for initial & continuous listing requirement of 25% of capital with public as per SCRR amendment 2010 [for all companies]: 10% for 4000 crores to be increased@5% every year

The Securities Contracts (Regulation) Rules 1957 provide for the requirements which have to be satisfied by companies for the purpose of getting their securities listed on any stock exchange in India. A dispersed shareholding structure is essential for the sustenance of a continuous market for listed securities to provide liquidity to the investors and to discover fair prices. Further, the larger the number of shareholders, the less is the scope for price manipulation. Accordingly, the Finance Minister in his Budget speech for 2009-10, inter- alia, proposed to raise the threshold for non- promoter, public shareholding for all listed companies. To implement the Budget announcement the Securities Contracts(Regulation) (Amendment) Rules, 2010 has been notified vide Press Release F.No.5/35/2006-CM dated 4th June 2010 through

this Notification. [download now]

a) The minimum threshold level of public holding will be 25% for all listed companies.

b) Existing listed companies having less than 25% public holding have to reach the minimum 25% level by an annual addition of not less than 5% to public holding.

c) For new listing, if the post issue capital of the company calculated at offer price is more than Rs. 4000 crore, the company may be allowed to go public with 10% public shareholding and comply with the 25% public shareholding requirement by increasing its public shareholding by at least 5% per annum.

d) For companies whose draft offer document is pending with Securities and Exchange Board of India on or before these amendments are required to comply with 25% public shareholding requirement by increasing its public shareholding by at least 5% per annum, irrespective of the amount of post issue capital of the company calculated at offer price.

e) A company may increase its public shareholding by less than 5% in a year if such increase brings its public shareholding to the level of 25% in that year.

f) The requirement for continuous listing will be the same as the conditions for initial listing.

g) Every listed company shall maintain public shareholding of at least 25%. If the public shareholding in a listed company falls below 25% at any time, such company shall bring the public shareholding to 25% within a maximum period of 12 months from the date of such fall.

New definitions in Rule 2 of SCRR:

(d) “public” means persons other than – (i) the promoter and promoter group; (ii) subsidiaries and associates of the company. Explanation: For the purpose of this clause the words “promoter‟ and “promoter group‟ shall have the same meaning as assigned to them under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements-ICDR) Regulations, 2009.

(e) “public shareholding” means equity shares of the company held by public and shall exclude shares which are held by custodian against depository receipts issued overseas”.

New Rule 19(2)(b) of SCRR:

(i) At least 25% of each class or kind of equity shares or debentures convertible into equity shares issued by the company was offered and allotted to public in terms of an offer document; or
(ii) At least 10% of each class or kind of equity shares or debentures convertible into equity shares issued by the company was offered and allotted to public in terms of an offer document if the post issue capital of the company calculated at offer price is more than Rs. 4000 crores;

Provided that the requirement of post issue capital being more than Rs. 4000 crores shall not apply to a company whose draft offer document is pending with SEBI on or before the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, if it satisfies the conditions prescribed in clause (b) of sub-rule 2 of rule 19 of the Securities Contracts (Regulation) Rules, 1956 as existed prior to the date of such commencement (which is: offering atleast 10% if there are 20 lakh in number of securities, Rs.100 crores of offer size is given to public and follows bookbuilding by offering 60% to QIB)
Provided further that the company, referred in sub-clause (ii), shall bring the public shareholding to the level of at least 25% by increasing its public shareholding to the extent of at least 5% per annum beginning from the date of listing of the securities, in the manner specified by the Securities and Exchange Board of India .
Provided further that the company may increase its public shareholding by less than 5% in a year if such increase brings its public shareholding to the level of 25% in that year.

 

New Rule 19(4) of SCRR – fresh application in all cases now!!!

An application for listing shall be necessary in respect of the following: (a) all new issues of any class or kind of securities of a company to be offered to the public; (b) all further issues of any class or kind of securities of a company if such class or kind of securities of the company are already listed on a recognised stock exchange.

 

New Rule 19(6A) – taking away the power from Clause 40A of Listing Agreement of stock exchanges as there is no more Provisio!!!

All the requirements with respect to listing or continuous listing requirement prescribed by these rules, shall, so far as they may be, also apply to a body corporate constituted by an Act of Parliament or any State Legislature. [Old Provisio deleted]

Note: SEBI’s power to relax listing requirements under SCRR is withdrawn.  Also note, there is no more Clause 40A continuous listing requirement of 10% if the company has 2 crores of listed shares with a market capitalisation of Rs.1000 crore or more.

Clause 40A is now Rule 19A mandating 25% as CONTINUOUS LISTING REQUIREMENT for all Companies:

Every listed company shall maintain public shareholding of at least 25%

Provided that any listed company which has public shareholding below 25% on the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, shall bring the public shareholding to the level of at least 25% by increasing its public shareholding to the extent of at least 5% per annum beginning from the date of such commencement, in the manner specified by SEBI.

Provided further that the company may increase its public sharholding by less than 5% in a year if such increase brings its public shareholding to the level of 25% in that year.

(2) Where the public shareholding in a listed company falls below 25% at any time, such company shall bring the public shareholding to 25%within a maximum period of 12 months from the date of such fall in the manner specified by the Securities and Exchange Board of India.”

Friday, May 21, 2010

Learnlabz Promotional Videos on Company Secretary (CS) Executive & Professional Programme Coaching Classes & Only This Much books released on Youtube today to make learning an interesting experience!!! [can also fetch you UPTO 50 marks in exams]

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Wednesday, April 28, 2010

What is Corpfiling for Listed Company & how investors can get information online now (excel based filing), SEBI/Stock exchange website

SEBI had, vide circular no SEBI/CFD/DIL/LA/4/2007/27/12 dated December 27, 2007 informed that Electronic Data Information Filing And Retrieval (EDIFAR) will be phased out gradually in view of new portal viz. Corporate Filing and Dissemination System (CFDS) put in place jointly by BSE and NSE at the URL www.corpfiling.co.inNo more EDIFAR...File it thru corpfiling SEBI says

 

SEBI has since discontinued the EDIFAR system w.e.f from April 1, 2010. In view of this, Stock Exchanges are advised to carry out the consequential amendments in Equity Listing Agreement i.e. removal of words, “and also through the EDIFAR website” from Clause 32 and omission of Clause 51 from Equity Listing Agreement. The Stock Exchanges are also advised to inform about discontinuation of EDIFAR to all the listed companies.

 

Now on, all the Stock Exchange/SEBI related filing such as

  • Company Results
  • Corporate Announcements
  • Company Factsheet
  • Quarterly Compliance Report
  • Share Holding Pattern
  • SAST (Takeover Code)
  • Insider Trading

can be done online through Microsoft Excel sheet as downloaded from the said website.  The portal aims at providing a single interface to the investors/shareholders/stakeholders to keep track of the latest filings of all the listed companies in India online irrespective of the Stock Exchange.

Download Pre-requisite softwares for corpfiling.

Source: SEBI CIR/CFD/DCR/3/2010 dated 16th April 2010

SEBI Timelines for 12 day listing of IPO/FPO/Public issue of securities w.e.f 3rd May 2010 - The Public offer schedule to commence trading

In consultation with market intermediaries, SEBI has issued a press release for Listing with Stock Exchanges to be made within 12 days of closure of public issue wef 1st May 2010.

In the new process, the syndicate members shall capture all data relevant for
purposes of finalizing basis of allotment while uploading bid data in the electronic bidding system of the stock exchanges. In order that the data so captured is accurate, syndicate members may be permitted an additional day to amend some of the data fields entered by them in the electronic bidding system.


It is to be noted that syndicate members shall be responsible for any error in the bid details uploaded by them. In case of apparent data entry error by either syndicate member or collecting bank in entering the application number in their respective schedules other things remaining unchanged, the application may be considered as valid and such exceptions may be recorded in minutes of the meeting submitted to stock exchange(s). In the event of mistake in capturing the application number by either the syndicate member or collecting bank leading to rejection of application, the registrar may identify based on the bid form, the entity responsible for the error. Valid records in electronic file will be those for which money is received.

This circular contains indicative timelines for the various activities in the issue process. The non-ASBA process in this regard is given in Annexure I of the circular. Since the ASBA process also needs to be revised pursuant to the
reduced timelines, the revised ASBA process is indicated in Annexure II of the circular.

Details of the mandatory data fields which are required to be captured into the electronic bidding system by the syndicate members including the fields which are modifiable/non-modifiable is given in Annexure III of the circular.

In order to facilitate quicker processing of applications for the purpose of allotment, instead of the name of the applicant, it is proposed to use PAN which is a unique identification number of the applicant. In this regard, the merchant bankers are directed to ensure that the following is clearly disclosed in the prospectus/abridged prospectus, application form and the pre-issue advertisements: “The applicants may note that in case the DP ID & Client ID and PAN mentioned in the application form and entered into the electronic bidding system of the stock exchanges by the syndicate members do not match with the DP ID & Client ID and PAN available in the depository database, the application is liable to be rejected.”

Stock Exchanges are directed to ensure that in case of revision of bids, there shall be appropriate provisions to capture the details of the payment instrument for difference of amount, if any.  It is given to understand that there is no uniformity in the documents required to be submitted to the stock exchanges along with the listing application which results in delay in the process. In this regard, stock exchanges are directed to clearly indicate the list of documents which they require for giving listing approval, at the time of grant of in-principle approval.

Stock Exchanges, Merchant Bankers, Registrar to an Issue, Bankers to an issue including those acting as Self Certified Syndicate Banks and depositories are directed to ensure that the instructions contained in this circular are complied with. This revised procedure shall be applicable to all public issues opening on or after May 3, 2010.

Download the IPO Timeline or Public Issue Schedule issued by SEBI from T+0 till T + 12 days, where “T” is the issue closing date and “T+12” is the date of commencement of trading vide SEBI CIR/CFD/DIL/3/2010 dated 22nd April 2010.

Market makers in SME exchange for Rs.10 lakh & max bid ask spread may be prescribed later, SEBI guidelines

Sub: Guidelines for market makers on Small and Medium Enterprise (SME) exchange/separate platform of existing exchange having nation wide terminal
SEBI has put in a framework for setting up of new exchange or separate platform of existing stock exchange having nationwide terminals for SME (hereinafter referred to as the ‘Exchange/ SME Exchange’). In order to operationalise the said framework, necessary changes have been made to applicable Regulations, circulars etc. As per the framework, market making has been made mandatory in respect of all scrips listed and traded on SME exchange. The following guidelines shall be applicable to the Market Makers on this exchange.
1. Applicability
These guidelines are applicable to all the registered Market makers for making market in all scrips listed and traded on SME exchange.
2. Registration of the Market Maker
Any member of the Exchange would be eligible to act as Market Maker provided the criteria laid down by the exchange are met. The member brokers desirous of acting as Market Maker in this exchange shall apply to the concerned stock exchange for registration as Market Makers unless already registered as a Market Maker.
3. The obligations and responsibilities of Market Makers
The Market Maker shall fulfil the following conditions to provide depth and
continuity on this exchange:
(a) The Market Maker shall be required to provide a 2-way quote for 75% of
the time in a day. The same shall be monitored by the stock exchange. Further, the Market Maker shall inform the exchange in advance for each and every black out period when the quotes are not being offered by the Market Maker.
(b) The minimum depth of the quote shall be Rs.1,00,000/- . However, the
investors with holdings of value less than Rs 1,00,000 shall be allowed to offer their holding to the Market Maker in that scrip provided that he sells his entire holding in that scrip in one lot along with a declaration to the effect to the selling broker.
(c) Execution of the order at the quoted price and quantity must be guaranteed by the Market Maker, for the quotes given by him.
(d) There would not be more than five Market Makers for a scrip. These would be selected on the basis of objective criteria to be evolved by the Exchange which would include capital adequacy, networth, infrastructure, minimum volume of business etc.
(e) The Market Maker may compete with other Market Makers for better
quotes to the investors;
(f) Once registered as a Market Maker, he has to start providing quotes from
the day of the listing / the day when designated as the Market Maker for the respective scrip and shall be subject to the guidelines laid down for market making by the exchange;
(g) Once registered as a Market Maker, he has to act in that capacity for a
period as mutually decided between the Merchant Banker and the market
maker.
(h) Further, the Market Maker shall be allowed to deregister by giving one
month notice to the exchange, subject to (g) above.
4. Dissemination of Information
The exchange should disseminate the list of Market Makers for the respective scrip to the public.
5. Number of Shares per Market Maker
The number of companies in whose shares a Market Maker would make market should be linked to his capital adequacy as decided by the exchange.
6. Risk Containment Measures and monitoring for Market Makers
All applicable margins should be levied and collected without any waiver/exemption.
Capital Adequacy
The exchanges would prescribe the capital adequacy requirement for its members to commensurate with the number of companies which Market Maker proposes to make market. Further, the stock exchange may lay down
additional criteria also for Market Makers as risk containment measures. The
same shall be monitored by the stock exchange.
Monitoring
All the requirements with regard to market making shall be monitored by the stock exchange and any violation of these requirements would be liable for punitive action to be taken by the Disciplinary Action Committee (DAC) of the Exchange, which may also include monitory penalty apart from the trade restriction as decided by the DAC under intimation to the Merchant Banker.
7. Price Band and Spreads
The exchanges shall prescribe the maximum spread between bid and ask price. The exchange, may at its discretion also prescribe the price bands for
the same. Further, in case of new issue the spread shall also be specified in
the offer document with the prior approval of the exchange.

Source: SEBI CIR/MRD/DP/ 14 /2010 dated 26th April 2010

Thursday, April 22, 2010

Understand all about ASBA - in public issues, rights issues, by Mutual Funds, by QIB's - an alternate way of investing, SEBI

Understand what is Application Supported by Blocked Amounts (ASBA)?

Whether ASBA is applicable for Rights Issues?

Can QIB’s apply in a public issue under ASBA mechanism?

Till now only Indian Retail Individual Investors bidding at cut-off Price were entitle to use ASBA facility.

In this regard, Stock Exchanges, Merchant Bankers, Registrar to an Issue and Bankers to an issue acting as Self Certified Syndicate Banks are advised to ensure that appropriate arrangements are made to accept ASBA forms from Qualified Institutional Buyers (QIBs) also in addition to the existing categories of investors on or after 1st May 2010.

Source: SEBI CIR/CFD/DIL/2/2010 dated 6th April 2010

RBI approval is mandatory for Public (IPO), Preferential issue, QIP by Private bank; Understand what is required for Public issue of securities (SEBI)

Approvals required for various Corporate Actions, Issues by Private Sector Banks

1. Initial Public Offers (lPOs) – Public Issues:
(i) All banks should obtain RBI approval for IPOs. After listing on the stock exchanges, banks are free to price their subsequent issues.
(ii) Issue price should be based on merchant banker's recommendation. There need be no reference to the CCI formula for deciding on the pricing of such issues.
2. Rights issues:
RBI approval would not be required for rights issues by both listed and unlisted banks. However, banks need to comply with the requirements that have been laid down in the circular DBOD.No.PSBD.BC.99/16.13.100/2004-05 dated June 25, 2005 on Rights Issue.
3. Bonus issues:
Private sector banks, both listed and unlisted, need not seek RBI's approval for bonus issues. The issues would, however, be subject to SEBI's requirements on issue of bonus shares, viz. bonus issues (a) should be made from free reserves built out of genuine profits or share premium, (b) should not dilute the value or rights of partly or fully convertible debentures, (c) should not be in lieu of dividend and (d) should not be made unless all partly paid-up shares are fully paid-up. Further, bonus issues may be issued without linkage to rights issues.
4. Preferential issue:
All preferential issues would require prior approval of RBI. Pricing of preferential issues by listed banks may be as per SEBI formula, while for unlisted banks the fair value may be determined by a chartered accountant or a merchant banker.
5. Qualified Institutional Placement (QIP):
Private Sector Banks need to approach RBI for prior 'in principle' approval in case of Qualified Institutional Placements. Banks need to approach RBI along with details of the issue once the bank’s Board approves the proposal of raising capital through this route. Further, allotment to the investors would be subject to compliance with SEBI guidelines on QIPs and RBI guidelines dated February 3, 2004 on acknowledgement of allotment / transfer of shares. Once the allotment process is complete, the banks would also be required to furnish complete details of the issue to RBI in the enclosed format for seeking post facto approval. This would be irrespective of whether any acquisition results in shareholding of 5% or more of the paid up capital of the bank.
6. In case of pricing of issues

  • where RBI approval is not required, pricing of issues should be as per SEBI guidelines (ICDR Regulations);
  • in cases where prior approval of RBI is required, pricing should take into account both SEBI and RBI guidelines.

Source: Issue and Pricing of Shares by Private Sector Banks vide RBI/2009-10/411 DBOD.No.PSBD.BC.92 /16.13.100/2009-2010 dated 20th April 2010

Wednesday, April 7, 2010

Listing with Stock Exchanges to be made within 12 days of closure of public issue wef 1st May 2010

Reduction in timelines between issue closure and listing

SEBI, in its continuing endeavour to make the existing public issue process more efficient, proposes to reduce the time between public issue closure and listing to 12 days from existing of up to 22 days. This will be applicable to public issues opening on or after May 1, 2010.

Source: PR No.88/2010 dated 6th April 2010

SEBI's guide to Understand Prospectus, its concepts, structure, etc... [read offer documents in public issues now]

Guide to understand an Offer Document

This sub‐section attempts to inform the structure of presentation of the content in an offer document. The basic objective is to help the reader to navigate through the content of an offer document.

(a) Cover Page

Under this head full contact details of the Issuer Company, lead managers and registrars, the nature, number, price and amount of instruments offered and issue size, and the particulars regarding listing. Other details such as Credit Rating, IPO Grading, risks in relation to the first issue, etc are also disclosed if applicable.

(b) Risk Factors

Under this head the management of the issuer company gives its view on the Internal and external risks envisaged by the company and the proposals, if any, to address such risks. The company also makes a note on the forward looking statements. This information is disclosed in the initial pages of the document and also in the abridged prospectus. It is generally advised that the investors should go through all the risk factors of the company before making an investment decision.

(c) Introduction

Under this head a summary of the industry in which the issuer company operates, the business of the Issuer Company, offering details in brief, summary of consolidated financial statements and other data relating to general information about the company, the merchant bankers and their responsibilities, the details of brokers/syndicate members to the Issue, credit rating (in case of debt issue), debenture trustees (in case of debt issue), monitoring agency, book building process in brief, IPO Grading in case of First Issue of Equity capital and details of underwriting Agreements are given. Important details of capital structure, objects of the offering, funds requirement, funding plan, schedule of implementation, funds deployed, sources of financing of funds already deployed, sources of financing for the balance fund requirement, interim use of funds, basic terms of issue, basis for issue price, tax benefits are also covered.

(d) About us

Under this head a review of the details of business of the company, business strategy, competitive strengths, insurance, industry‐regulation (if applicable), history and corporate structure, main objects, subsidiary details, management and board of directors, compensation, corporate governance, related party transactions, exchange rates, currency of presentation and dividend policy are given.

(e) Financial Statements

Under this head financial statement and restatement as per the requirement of the Guidelines and differences between any other accounting policies and the Indian Accounting Policies (if the Company has presented its Financial Statements also as per either US GAAP/IFRS) are presented.

(f) Legal and other information

Under this head outstanding litigations and material developments, litigations involving the company, the promoters of the company, its subsidiaries, and group companies are disclosed. Also material developments since the last balance sheet date, government approvals/licensing arrangements, investment approvals (FIPB/RBI etc.), technical approvals, and indebtedness, etc. are disclosed.

(g) Other regulatory and statutory disclosures

Under this head, authority for the Issue, prohibition by SEBI, eligibility of the company to enter the capital market, disclaimer statement by the issuer and the lead manager, disclaimer in respect of jurisdiction, distribution of information to investors, disclaimer clause of the stock exchanges, listing, impersonation, minimum subscription, letters of allotment or refund orders, consents, expert opinion, changes in the auditors in the last 3 years, expenses of the issue, fees payable to the intermediaries involved in the issue process, details of all the previous issues, all outstanding instruments, commission and brokerage on, previous issues, capitalization of reserves or profits, option to subscribe in the issue, purchase of property, revaluation of assets, classes of shares, stock market data for equity shares of the company, promise vis‐à‐vis performance in the past issues and mechanism for redressal of investor grievances is disclosed.

(h) Offering information

Under this head Terms of the Issue, ranking of equity shares, mode of payment of dividend, face value and issue price, rights of the equity shareholder, market lot, nomination facility to investor, issue procedure, book building procedure in details along with the process of making an application, signing of underwriting agreement and filing of prospectus with SEBI/ROC, announcement of statutory advertisement, issuance of confirmation of allocation note("can") and allotment in the issue, designated date, general instructions, instructions for completing the bid form, payment instructions, submission of bid form, other instructions, disposal of application and application moneys, , interest on refund of excess bid amount, basis of allotment or allocation, method of proportionate allotment, dispatch of refund orders, communications, undertaking by the company, utilization of issue proceeds, restrictions on foreign ownership of Indian securities, are disclosed.

(i) Other Information

This covers description of equity shares and terms of the Articles of Association, material contracts and documents for inspection, declaration, definitions and abbreviations, etc.

Investment in public Issues/ rights issues

(a) Where can I get application forms for applying/ bidding for the shares?

Application forms for applying/bidding for shares are available with all syndicate members, collection centers, the brokers to the issue and the bankers to the issue. In case you intend to apply through new process introduced by SEBI i.e. APPLICATIONS SUPPORTED BY BLOCKED AMOOUNT (ASBA), you may get the ASBA application forms form the Self Certified Syndicate Banks. For more details on “ASBA process” please refer to the “FAQs on ASBA”

(b) Whom should I approach if the information disclosed in the offer document appears to be factually incorrect?

The document is prepared by Merchant Banker(s), registered with SEBI. They are required to do the due diligence while preparing an offer document. The draft offer document submitted to SEBI is put on website for public comments. In case, you find any instance of misinformation/ lack of information, you may send your complaint to Lead Manager to the issue and/ or to SEBI, at this address: Securities & Exchange Board of India, C4 A, G Block, Bandra KurlaComplex, Bandra (E), Mumbai‐ 400051.

(c) Is it compulsory for me to have a Demat Account?

As per the requirement, all the public issues of size in excess of Rs.10 crore, are to made compulsorily in demat mode. Thus, if you intend to apply for an issue that is being made in a compulsory demat mode, you are required to have a demat account and also have the responsibility to put the correct DP ID and Client ID details in the bid/application forms. You can also refer to FAQs relating to demat available in the URL http://investor.sebi.gov.in/faq/dematfaq.html in the Investor Education section of the SEBI website.

(d) Is it compulsory to have PAN?

Yes, it is compulsory to have PAN. Any investor who wants to invest in an issue should have a PAN which is required to be mentioned in the application form. It is to be distinctly understood that the photocopy of the PAN is not required to be attached along with the application form at the time of making an application.

(e) For how many days an issue is required to be kept open?

The period for which an issue is required to be kept open is:

For Fixed price public issues: 3‐10 working days

For Book built public issues: 3‐7 working days extendable by 3 days in case of a revision in the price band

For Rights issues: 15‐30 days.

(f) When do I get the allotment/ refund of shares?

For Fixed price public issues: 30 days of the closure of the issue

For Book built public issues: 15 days of the closure of the issue

For Rights issues: 15 days of the closure of the issue

(g) How can I know about the demand for an issue at any point of time?

The status of bidding in a book built issue is available on the website of BSE/NSE on a consolidated basis. The data regarding bids is also available investor category wise. After the price has been determined on the basis of bidding, the public advertisement containing, inter alia, the price as well as a table showing the number of securities and the amount payable by an investor, based on the price determined, is issued. However, in case of a fixed price issue, information is available only after the closure of the issue through a public advertisement, issued within 10 days of dispatch of the certificates of allotment/ refund orders.

(h) How will I get my refund in an issue?

You can get refunds in an issue through various modes viz. registered/ordinary post, Direct Credit, RTGS (Real Time Gross Settlement), ECS (Electronic Clearing Service) and NEFT (National Electronic Funds Transfer). As stated above, if you are residing in one of the 68 centers as specified by Reserve Bank of India, then you will get refunds through ECS only except where you are otherwise disclosed eligible under Direct Credit and RTGS. If you are residing at any other center, then you will continue to get refunds through registered/ordinary post. You are therefore advised to read the instructions given in the prospectus/ abridged prospectus/ application form about centers. For more details, you may read subsection on “Electronic Clearing Scheme for Refunds”.

(i) When will the shares allotted to me get listed?

In book built public issue the listing of shares will be done within 3 weeks after the closure of the issue. In case of fixed price public issue, it will be done within 37 days after closure of the issue.

(j) How will I know which issues are coming to the market?

The information about the forthcoming issues may be obtained from the websites of Stock Exchanges. Further the issuer coming with an issue is required to give issue advertisements in an English national Daily with wide circulation, one Hindi national newspaper and a regional language newspaper with wide circulation at the place where the registered office of the issuer is situated.

(k) Where to I get the copies of the offer document?

The soft copies of the offer documents are put up on the website of Merchant banker and on the website of SEBI under Reports/Documents section [http://www.sebi.gov.in/Index.jsp?contentDisp= Section&sec_id=5 ]. Copies of the offer documents in hard form may be obtained from the merchant banker or office of SEBI, SEBI Bhawan, Plot No. C4‐A “G” Block, BKC, Bandra (E), Mumbai ‐ 400051 on a payment of Rs 100 through Demand Draft.

(l) How do I find the status of offer documents filed by issuers with SEBI?

SEBI updates the processing status of offer documents on its website every week under the section http://www.sebi.gov.in/Index.jsp?contentDisp=PrimaryMarket in SEBI website. The draft offer documents are put up on the website under Reports/Documents section. The final offer documents that are filed with SEBI/ROC are also put up for information under the same section.

(m) Whom do I approach if I have grievances in respect of non receipt of shares, delay in refund etc.?

You can approach the compliance officer of the issue, whose name and contact number is mentioned on the cover page of the Offer Document. You can also address your complaints to SEBI at the following address: Office of Investor Assistance & Education, Securities & Exchange Board of India, C4A, G Block,Bandra Kurla Complex, Bandra (E), Mumbai‐ 400051.

Understanding Book Building

(a) What is book Building?

Book building is a process of price discovery. The issuer discloses a price band or floor price before opening of the issue of the securities offered. On the basis of the demands received at various price levels within the price band specified by the issuer, Book Running Lead Manager (BRLM) in close consultation with the issuer arrives at a price at which the security offered by the issuer, can be issued.

(b) What is a price band?

The price band is a band of price within which investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%. The price band can be revised. If revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding thirteen days.

(c) How does Book Building work?

Book building is a process of price discovery. A floor price or price band within which the bids can move is disclosed at least two working days before opening of the issue in case of an IPO and atleast one day before opening of the issue in case of an FPO. The applicants bid for the shares quoting the price and the quantity that they would like to bid at. After the bidding process is complete, the ‘cut‐off’ price is arrived at based on the demand of securities. The basis of Allotment is then finalized and allotment/refund is undertaken. The final prospectus with all the details including the final issue price and the issue size is filed with ROC, thus completing the issue process. Only the retail investors have the option of bidding at ‘cut‐off’.

(d) How does “cut‐off” option works for investors?

“Cut‐off” option is available for only retail individual investors i.e investors who are applying for securities worth up to Rs 1,00,000/‐ only. Such investors are required to tick the cut‐off option which indicates their willingness to subscribe to shares at any price discovered within the price band. Unlike price bids (where a specific price is indicated) which can be invalid, if price indicated by applicant is lower than the price discovered, the cut‐off bids always remain valid for the purpose of allotment

(e) Can I change/revise my bid?

Yes, you can change or revise the quantity or price in the bid using the form for changing/revising the bid that is available along with the application form. However, the entire process of changing or revising the bids shall be completed within the date of closure of the issue.

(f) Can I cancel my Bid?

Yes, you can cancel your bid anytime before the finalization of the basis of allotment by approaching/ writing/ making an application to the registrar to the issue.

(g) What proof can I request from a trading member or a syndicate member for entering bids?

The syndicate member returns the counterfoil with the signature, date and stamp of the syndicate member. You can retain this as a sufficient proof that the bids have been accepted by the trading / syndicate member for uploading on the terminal.

Wednesday, March 31, 2010

India's 1st IDR issue: Stan Chart abroad has filed draft offer document with SEBI to raise money through BSE/NSE, with FAQ's & other provisions

INDIA has developed as a brand when it comes to Securities Market, even think of technologies, regulator, etc…which is time & again proved now when a body corporate from abroad has decided to raise money from India by submitting its foreign securities and is in the process of getting itself registered with Indian Stock Exchanges (BSE/NSE) with less compliance requirements.

 

Confused!!! This happened on 30th March 2010, when Standard Chartered PLC has filed its draft offer document with SEBI for issue of IDR’s to raise money from India.  India is in the process of becoming a destination beyond merely attracting Foreign Direct Investments and has reached the level of infusing capital into Companies from United Kingdom!!!

Standard Chartered PLC is a Company incorporated in England and Wales and listed in London Stock Exchange and Hong Kong Stock Exchange, and now soon will be listed with Bombay and National Stock Exchange with its IDR’s.

 

The Draft Offer Document for IDR which is published in SEBI website is a master piece of Legal & Capital Market laws, Financial & Accounting Standards,  of India, UK and China with 804 pages of information.  On reading this document, one can understand,

  • Company Laws of India, UK & China
  • Securities laws, listing, delisting & takeover code provisions in the countries
  • Comparison of Corporate Governance norms
  • Foreign Exchange laws (FEMA) and the approvals required for the issue
  • Financials as presented in these Countries
  • IFRS and Indian Accounting Standards
  • Taxation provisions under these countries

So, this offer document is a one-stop referencer of various laws in the countries.

IDR ISSUE DETAILS

ISSUE OF 220,000,000 INDIAN DEPOSITORY RECEIPTS (‘‘IDRs’’) AT AN OFFERING PRICE OF Rs. [*] PER IDR WITH EVERY [*] IDRS* REPRESENTING ONE SHARE OF STANDARD CHARTERED PLC, OF US$0.50 NOMINAL VALUE.

RISK IN RELATION TO THE FIRST ISSUE
This being the first public issue of IDRs representing the underlying Shares of the Company, there has been no formal market for the IDRs. No assurance can be given regarding active and/or sustained trading in the IDRs of the Company or regarding the price at which the IDRs will be traded after listing.

 

Further, this post deals with Foreign Exchange provisions and FAQ on IDR’s from the said offer document.

 

FOREIGN INVESTMENT, EXCHANGE CONTROLS AND OTHER INDIAN LAWS
UK Exchange Control Regulations: There are currently no UK laws which affect the import or export of capital, or the remittance of dividends, interest or other payments. There are no restrictions on the transfer of UK securities.
Hong Kong Foreign Investment and Exchange Control: There are currently no Hong Kong laws which restrict foreign investment (other than in relation to investments in certain telecommunications and broadcasting service providers) or impose foreign exchange control in Hong Kong. It is specified in the Basic Law of Hong Kong that no foreign exchange control policies shall be adopted. 

Indian Exchange Control Regulations: Pursuant to the terms of the RBI Circular, prior approval of the sectoral regulator(s) is required for raising funds through issuance of IDRs by financial/banking companies having a presence in India, either through a branch or subsidiary. The RBI approved the Issue on 7 October 2009.

Pursuant to a letter dated 14 January 2010, terms of the approval letter dated 7 October 2009 were partially modified and clarified by the RBI. Further, the RBI on 22 March 2010 permitted the issue of IDRs not exceeding 5% of the total Shares of the Company. This approval is valid for a period of three months. Remittance of proceeds from the Issue Pursuant to the terms of the RBI Circular issued under FEMA, the proceeds of the issue of IDRs are required to be repatriated outside India.  Investment in IDRs Pursuant to the terms of the RBI Circular, FIIs including SEBI approved sub-accounts of the FIIs, registered with SEBI and NRIs may invest, purchase, hold and transfer IDRs, subject to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. Further, NRIs are allowed to invest in the IDRs out of funds held in their NRE/ FCNR(B) account, maintained with an authorised dealer/authorised bank. No single individual or single entity or group of entities in India, other than QIBs, shall hold, directly or indirectly, IDRs exceeding 5% of the Issue. No single QIB or a group of QIBs shall hold IDRs exceeding 15% of the Issue.  In accordance with the regulations of the RBI, no bank in India shall: (i) grant a loan to any investor for the purpose of subscribing for any IDRs; or (ii) grant a loan to any person which is secured against any IDRs. Ability to withdraw Shares from the IDR Facility and to deposit further shares into the IDR Facility Pursuant to the terms of the RBI Circular, IDRs are not redeemable into underlying equity shares before the expiry of a one-year period from the date of issue of the IDRs. The SEBI Regulations state that automatic fungibility of IDRs is not permitted. Therefore, fungibility of IDRs into the underlying Shares would be permitted only after the expiry of the one year period from the date of issue of the IDRs and subsequent to obtaining RBI approval on a case-by-case basis. Further, two-way fungibility (the ability to purchase existing Shares on the London Stock Exchange and/or the Hong Kong Stock Exchange and deposit them into the IDR programme) is not currently permitted.  Additionally, in terms of the RBI Circular, at the time of redemption/conversion of IDRs into
underlying shares, the Indian holders (persons resident in India) of IDRs are required to comply with the provisions of the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004.
The ability of Indian residents to hold underlying Shares is limited. Pursuant to the terms of the RBI Circular, resident individuals are allowed to hold the underlying Shares only for the purpose of sale.
The IDR Holders are required to sell the underlying Shares within a period of 30 days from the date of conversion of the IDRs into underlying Shares. The FEMA provisions are not applicable to the holding of the underlying Shares, on redemption of IDRs by the FIIs including SEBI approved sub-accounts of the FIIs and NRIs.  Under the existing guidelines, an individual resident in India is permitted to remit only up to US$200,000 per financial year to undertake any capital account/current account transactions including investment in foreign securities. Furthermore, a company incorporated in India can invest only up to 50% of its net worth by way of overseas portfolio investments per financial year.
Possible restrictions on the ability of the Company to distribute further shares in India Under the Indian Companies Act, a company incorporated outside India cannot issue, circulate or distribute any offer of securities to more than 50 persons (other than professional investors) resident in India without registering a prospectus with the RoC. Such a prospectus is required to contain the information specified in the Indian Companies Act and the SEBI Regulations. The exact law applicable to and the process to be followed for the registration of such a prospectus is not clear at present.

Eligibility Criteria:

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THE IDR FACILITY, PRINCIPAL PARTICIPANTS AND KEY DOCUMENTATION

(Frequently Asked Questions – FAQs on IDR)


What are IDRs?
IDRs are depository receipts denominated in Indian Rupees issued by the Depository. Every [*] IDRs will represent an ownership interest in one Share.* Shares underlying the IDRs will be deposited with the Custodian who will hold the Shares on behalf of the Depository in accordance with the terms of the Custody Agreement (for the purposes of this section, referred to as the ‘‘Deposited Shares’’). Each IDR will also represent any securities, cash or other property attributable to the Deposited Shares that has been deposited with the Custodian or the Depository but has not been directly distributed to the IDR Holders (for the purposes of this section, together with the Deposited Shares, referred to as the ‘‘Deposited Property’’).
Pursuant to the Issue, [*] IDRs representing [*] Deposited Shares will initially be issued by the Depository. Every [*] IDRs represent one Share.*

Who are the principal participants in the IDR Facility and what are their roles?
The principal participants in the IDR Facility are the Company, the Custodian, the Depository and the Registrar.  Under the IDR Facility, the Company deposits the Deposited Shares with the Custodian who holds the Deposited Shares on behalf of the Depository. The Company owes certain obligations to the Depository (and, under a Deed Poll executed by the Company to the IDR Holders) in respect of the Deposited Property under the Deposit Agreement. These obligations are described further throughout
this summary.  Kindly note, a deed poll is a deed made and executed by a single party.

The Depository is appointed by the Company pursuant to the Deposit Agreement. The Depository will issue the IDRs representing the Deposited Shares to IDR Holders and will hold the Deposited Property (and all rights, benefits and obligations attaching thereto) as bare trustee under English law
for the IDR Holders. The Depository owes certain obligations to IDR Holders in respect of the Deposited Property under the terms and conditions of the IDRs. These obligations are described further throughout this summary.

 

The Custodian is appointed by the Depository pursuant to the Custody Agreement. The Custodian will hold the Deposited Property on behalf of the Depository and will, upon receipt of instructions from the Depository, take certain actions with respect to the Deposited Property to enable IDR Holders to obtain the benefit of such Deposited Property. The Registrar is appointed by the Company and the Depository under the Registrar Agreement and the Transfer Agent Agreement to provide certain services to the Depository in relation to the IDR Facility.  In the event that the appointment of any of the Depository, the Custodian or the Registrar is terminated or any of those entities resigns from office, no such resignation or termination of appointment will be effective until a successor entity has been appointed to act in the relevant capacity. IDR Holders will be notified of any such changes.

Can IDR Holders deposit further Shares in the IDR Facility?
IDR Holders cannot deposit further Shares in the IDR Facility. The Company may deposit further Shares in the IDR Facility in limited circumstances. For example, additional Shares may be deposited in the IDR Facility in the event that

(i) such Shares are issued as a dividend or free distribution on Deposited Shares;

(ii) such Shares are acquired by IDR Holders from the Company during a rights issue; or

(iii) such Shares are issued by the Company to the IDR Holders in respect of the Deposited Shares as a result of any change in the par value, sub-division, consolidation or other reclassification of Deposited Shares or upon any reorganisation, merger or consolidation of the Company. However, such deposits of further shares would be subject to certain limitations as further described herein.

Other shareholders of the Company cannot deposit shares in the IDR Facility.
Can IDR Holders withdraw the Deposited Shares represented by the IDRs from the IDR Facility?
IDR Holders may only withdraw the Deposited Shares with the prior approval of the RBI. In addition, under Indian law, there is an absolute prohibition on the withdrawal of Deposited Shares for a period of one year following the date of the issue of the IDRs. Each IDR Holder will have to individually approach the RBI for such approval at their own expense. At present, there is no specified format for making such an application. An IDR Holder will have to make a general application pursuant to the provisions of FEMA. There can be no assurance that such approval will be granted by the RBI in a timely manner or at all. Moreover, IDR Holders will not be able to withdraw fractions of Shares.  In addition, IDR Holders who are able to cancel their IDRs and become shareholders of the Company may still be subject to certain limitations not applicable to other shareholders.

 

If an IDR Holder withdraws Deposited Shares having obtained the required approvals, the IDR Holder will be required to provide a Withdrawal Order in the form annexed to the Deposit Agreement (a copy of which can be obtained from the Registrar) to the Depository, pay a fee of US$0.05 or less (exchanged into INR at prevailing exchange rates) per Deposited Share evidenced by those IDRs to the Depository and have such Shares registered in the IDR Holder’s name or that of a designated nominee. A Withdrawal Order cannot be given in respect of a fraction of a Deposited Share. Deposited Shares, once withdrawn, may be traded on the London Stock Exchange (or, upon completion of certain procedures by an IDR Holder, on the Hong Kong Stock Exchange). Following withdrawal of the Deposited Shares, IDR Holders would also have to pay certain customary fees and charges in connection with the trading of such withdrawn Shares on these stock exchanges, which would include brokerage commissions and applicable stamp duties. Other persons resident in India including resident individuals are allowed to hold the Deposited Shares only for the purpose of sale within a period of 30 days from the date of conversion of IDRs.

OWNERSHIP AND TRANSFER OF IDRS
Who can hold IDRs?

Pursuant to the current SEBI Regulations and the RBI Circular, IDRs may be held, purchased or transferred by Retail Individual Bidders, non-institutional bidders and qualified institutional bidders including persons resident in India, NRIs and FIIs, including SEBI approved sub-accounts of FIIs registered with SEBI, or to, or for the account or benefit of, such persons, in each case subject to applicable laws. Insurance companies are not permitted to invest in or hold IDRs. Commercial banks may invest or hold IDRs subject to compliance with applicable prudential limits specified by the RBI from time to time.
How will IDR Holders acquire and hold the IDRs?
The IDRs will initially be represented by Dematerialised IDRs evidenced by the Register maintained or procured to be maintained by the Depository showing the latest available registered holding position received from NSDL and CDSL. NSDL and CDSL will credit the dematerialised account of an IDR Holder with the relevant number of IDRs held by that IDR Holder.
Can IDR Holders ever hold IDRs in physical form?
IDR Holders may, at their option, elect to hold the IDRs in physical form represented by an IDR Certificate, rather than in electronic form represented by Dematerialised IDRs. IDR Holders will be required to pay a sum per IDR Certificate which is determined by the Depository to be a reasonable charge to reflect the work, costs and expenses involved, if such an election is made. In addition, IDR Holders will be entitled to receive IDR Certificates at the expense of the Company upon the occurrence of certain events relating to NSDL and CDSL ceasing to operate or in the event that the
Depository determines that by holding IDR Certificates certain deductions or withholdings from payments to IDR Holders would be avoided.
Can IDRs be transferred?
IDRs will be listed on the Stock Exchanges and may be bought and sold through the facilities of the Stock Exchanges in accordance with the procedures, rules and regulations and other applicable laws relating to the transfer of listed securities in India.

FEES AND OTHER PAYMENTS BY IDR HOLDERS
Are there any fees and charges payable by IDR Holders to the Depository with respect to the IDRs?
IDR Holders are required to pay a fixed fee of US$0.05 or less (exchanged into INR at prevailing exchange rates) per Share evidenced by [*] IDRs upon a withdrawal of the Shares from the IDR Facility and on the issue of any future IDRs (other than the Issue).  For services performed by the Depository, any of the Depository’s agents, including the Custodian, or the agents of the Depository’s agents in connection with the IDRs, in relation to the servicing of Deposited Shares or other Deposited Property, IDR Holders will be charged a fee of US$0.016 or less per Share evidenced by [*] IDRs (and a proportionate amount where an IDR Holder holds less than [*] IDRs representing less than a Share), and that amount will be deducted by the Depository from each cash dividend or other cash distribution received by the Depository on or in respect of the underlying Shares or other Deposited Property.  The service fee per Share evidenced by the IDRs will be calculated on a sliding scale depending on the amount of the dividend per Share as illustrated by the following table:

In respect of any issue of rights or distribution of Shares (whether or not evidenced by IDRs) or other securities or other property (other than cash) upon exercise of any rights, any free distribution, stock dividend or other distribution, IDR Holders will be required to pay a sum per IDR which is determined by the Depository to be a reasonable charge to reflect the costs and expenses incurred by or on behalf of the Company or the Depository or any of the Depository’s agents, including the Custodian, or the agents of the Depository’s agents, in connection with such issue of rights or distribution of Shares or other securities or other property.
Are there any other fees and charges that are likely to be payable by IDR Holders?
Certain additional fees may become payable if particular services are requested by IDR Holders. For example, if an IDR Holder requests the issue of an IDR Certificate in definitive registered form including in replacement for a mutilated, defaced, lost, stolen or destroyed IDR Certificate), subject
to indemnification where appropriate, there would be a charge per IDR Certificate that is determined by the Depository to be a reasonable charge to reflect the work, costs (including printing costs) and expenses involved. In addition, there would be an administrative charge for the provision of copies of certain documents, such as the Deposit Agreement, upon request by an IDR Holder. The Depository is also entitled to charge IDR Holders for all expenses (including currency conversion expenses), transfer and registration fees, taxes, duties and charges payable by the Depository, the Registrar or the Custodian, or any of their agents, in connection with its services.  IDR Holders will also have to pay the Depository certain fees together with any costs, charges, taxes and expenses incurred by the Depository if and when it assists IDR Holders in participating in a tender offer, open market buy-back or takeover offer in respect of the Shares including in a tender of Shares to the Company following a de-listing of the Shares from the London Stock Exchange.
Who pays taxes arising in relation to the IDRs?
The Company will pay all taxes and stamp duties in the United Kingdom and India associated with the initial issuance of the Deposited Shares to the Custodian in accordance with the terms of the IDR Facility. IDR Holders will be responsible for all other taxes or other governmental charges payable on the IDRs or on the Deposited Shares.  The Depository is not liable for any taxes, duties in the United Kingdom and India, charges, costs or expenses which may become payable in respect of the Deposited Shares or other Deposited Property or the IDRs. Such part thereof as is proportionate or referable to an IDR shall be payable by the IDR Holder to the Depository at any time on request or may be deducted from any amount due or becoming due on such IDR in respect of any dividend or other distribution. A failure to comply with such request may result in the sale of the Deposited Shares represented by the IDRs of the defaulting IDR Holder.  Payments to IDR Holders of dividends or other distributions in respect of the Deposited Shares shall be subject to deduction of applicable withholding taxes.

 

RIGHTS AND ENTITLEMENTS OF IDR HOLDERS
Are IDR Holders entitled to the same rights and entitlements as holders of Shares?
The Company has agreed that for all corporate actions (including voting, rights issues, the payment of dividends and other distributions), it will treat IDR Holders on an equitable basis vis-a` -vis other holders of Shares in the home country of the Company. Additionally, where the Shares are also listed
on other exchanges in addition to its home country, the Company will ensure that IDR Holders are also treated on an equitable basis vis-a` -vis the holders of such Shares in other jurisdictions where the Shares are listed. In circumstances where certain corporate actions, which are available to the holders 45 of Shares in the home country of the Company and other jurisdictions where the Shares are listed, are not permitted by Indian laws to be offered to IDR Holders, the Company has agreed to provide equitable treatment to the IDR Holders for such corporate actions as allowed by applicable law and to the extent possible.

The practical effect of the Company’s obligation in this regard is that, subject to certain exceptions, whenever the Company and/or the Depository is unable to make distributions available to the IDR Holders, the Depository will try and sell the Deposited Property that is the subject of the distribution on behalf of the IDR Holders and distribute the net proceeds thereof as a cash distribution to the IDR Holders. However, there is no assurance as to the value, if any, that the Depository would receive upon the sale of such Deposited Property.  Subject to this general principle, the rights of IDR Holders will be affected by certain operational practices of and the requirement to pay certain fees to the Depository, as a result of participating in the IDR Facility, which would not be applicable to other holders of Shares.  The principal practical limitation is the additional procedural step involved in communicating with IDR Holders which can limit the ability of IDR Holders to exercise their rights and receive their entitlements in respect of various corporate actions relating to the Company under the Conditions. Holders of the Shares of the Company will receive notice directly from the Company and will be able to submit their instructions in respect of any corporate action directly to the Company or, if applicable, a third party. IDR Holders, in contrast, will receive the notice in accordance with the Deposit Agreement. Pursuant to the Deposit Agreement the Company will provide the notice to the Depository. The Depository shall as soon as reasonably practicable forward to the IDR Holders notice of such event and, in any event, no later than ten days before the date of the relevant meeting and/or the date of acceptance of instructions in relation to the relevant corporate action. In order to exercise their right to participate in a corporate action relating to the Company, IDR Holders must provide their instruction in respect of the corporate event to the Depository. Because of this additional procedural step, the process for the submission of instructions may take longer for IDR
Holders than for holders of the Shares. Further, IDR Holders may not be able to receive the documentation relating to the corporate event in time to enable them to return their instructions to the Depository in a timely manner. IDRs for which the Depository does not receive timely instructions will not be eligible to participate in the corporate event.

 

Will IDR Holders receive cash dividends and other cash distributions on the Deposited Shares represented by the IDRs?
An IDR Holder will be entitled to dividends and other cash distributions in respect of the Deposited Shares represented by their IDRs if the Company declares such a cash dividend or cash distribution to be payable to holders of Shares (and the Depository receives from the Company such cash dividend or other cash distribution) and the IDR Holder is registered as an IDR Holder on the relevant record date set by the Depository.

 

Payments of cash dividends and other cash amounts in respect of IDRs represented by Dematerialised IDRs will be made by the Depository through the Registrar.  Any dividend or other sum payable in cash in respect of the IDRs to IDR Holders, will be paid by cheque, demand draft or pay order sent by post to the IDR Holder at his registered address recorded in the Register maintained by the Registrar.  Prior to distribution, the Depository will make reasonable efforts to convert the amount received into Indian Rupees. If it is impractical to effect such conversion, the Depository may distribute the dividend in the relevant foreign currency to the extent permitted under applicable law or hold such other currency for the benefit of IDR Holders entitled thereto. The Depository is under no obligation to invest any currency that it cannot convert and it will not be liable for any interest. If exchange rates fluctuate during a time when the Depository cannot convert such cash distribution, IDR Holders may lose some or all of the value of the distributions.
Will IDR Holders receive any dividends or other distributions on the Deposited Shares represented by the IDRs that are not in the form of cash?
IDR Holders should be aware that there are certain limitations on the ability of the Company to make available to IDR Holders through the Depository any dividends or other distributions on the Deposited Shares that are not in the form of cash. This is because of provisions of English law and the potential application of certain provisions of Indian law. See the risk factor titled ‘‘Certain corporate actions of the Company may entitle existing shareholders of the Company to receive further Shares from the Company. However, the ability of IDR Holders to receive such further shares from the
Company (either in the form of Shares or IDRs representing the Shares) may be restricted’’ in the section titled ‘‘Risk Factors’’ on page 69 of this Draft Red Herring Prospectus for further information.
This would be particularly applicable if the Company were to undertake a rights issue or a bonus issue of shares or offer holders of Shares the right to receive Shares instead of all or part of a cash dividend (a scrip dividend alternative) and the IDR Holder were to accept this option. In relation to a scrip dividend alternative, the Company would normally send a circular to holders of Shares giving details of the terms of the relevant election and how an election can be made, together with a form of election stating the number of new Shares that a holder is entitled to receive instead of the cash dividend. If the Company determines that it is permissible and practical for IDR Holders to participate in any scrip dividend alternative, IDR Holders would receive the relevant notice of election and be entitled to submit their election through the Depository Other distributions If the Depository receives any distribution in securities (other than Shares) or in other property (other than cash), the Depository will distribute such securities or other property to the IDR Holders entitled thereto in a manner deemed equitable and practicable by the Depository subject to applicable laws (which may involve the sale of such securities or other property and the distribution of the sale proceeds as a cash distribution to the IDR Holders entitled thereto).

What happens in the event that the Company undertakes a rights issue?
IDR Holders should be aware that there are certain limitations on the ability of the Company to make a rights issue available to IDR Holders through the Depository because of provisions of English law and the potential application of certain provisions of Indian law.

In addition, making a rights issue available to IDR Holders could have timetable implications that cannot be satisfactorily resolved and which may make it difficult for the Company to undertake a rights issue simultaneously in the UK and in India. Whilst the time period between the date of announcement and the date of allotment is 10 Business Days in a rights issue in the UK, the existing guidelines on rights issues in India require that the rights issue be kept open for a substantially longer period. In light of the existing differences in the timeline followed for a rights issue in the UK and in
India, it would be difficult for the Company to undertake the rights issue simultaneously in the UK and in India. A rights issue to the same class of shareholder may not be able to operate on two different time lines as this would give rise to trading and fungibility issues as well as questions in the home market on equality of treatment of shareholders, where shareholders in certain jurisdictions are given a longer time frame within which to accept.

Given the limitations above, it is likely that, subject to certain conditions, the Depository will exercise the option available under the Conditions to either sell such rights and distribute the net proceeds of the IDR Holders entitled thereto or, in the event that is not lawful or practicable, for the Depository to take such action, to permit the rights to lapse and notify the IDR Holders of such decision.

However, the Depository may, in substitution of this option, if it is lawful or practicable to do so, either: (i) take such steps as are necessary to enable IDR Holders to subscribe for the Shares represented by such rights, and issue additional IDRs to the IDR Holders who subscribe for such Shares; (ii) distribute the rights themselves to the IDR Holders; or (iii) arrange for IDR Holders to subscribe for any additional rights which are available due to lack of take-up by other holders of Shares. In the event that it is not lawful or practicable for the Depository to take any of these specified actions or if there are rights to which the IDR Holders are not entitled because of fractional entitlements to shares, the Depository shall permit the rights or, as applicable, the relevant rights to lapse and will notify the IDR Holders of such decision.

If the Depository determines to take such steps as are necessary to implement the option set out in
(i) above, IDR Holders who elect to take up such rights will be obliged to pay an amount to the Depository representing (in Indian Rupees) an amount equal to the subscription price for such rights plus any additional amount in respect of such subscription price to ensure that the Depository (acting in good faith) will, after conversion of such Indian Rupees into the currency by which subscriptions may be made, have sufficient funds to satisfy the subscription price taking account of any possible fluctuations in rates of foreign currency. Following conversion of this amount by the Depository to
the relevant foreign currency and payment of the subscription price in the relevant foreign currency, the Depository will return any surplus subscription amounts (after converting such amounts into Indian Rupees) to IDR Holders at the time of issue of the additional IDRs representing the new
Deposited Shares or as a cash distribution.


Will IDR Holders be entitled to vote the Deposited Shares represented by the IDRs?
IDR Holders have voting rights with respect to the Deposited Shares and will generally be entitled to vote on resolutions of the Company. The Articles of the Company provide that a shareholder is required to hold four Shares in order to register one vote on a poll. Accordingly the IDR Holders are required to hold IDRs representing at least four Shares so as to register one vote on a poll. For further information on the voting rights attached to the Shares please see the section titled ‘‘Main Provisions of the Articles of Association’’ on page 457 of this Draft Red Herring Prospectus. If IDR Holders wish to attend shareholder meetings they will be able to instruct the Depository to appoint them as proxy in respect of the Shares underlying the IDRs. IDR Holders are entitled to instruct the Depository to exercise voting rights in respect of the Shares represented by their IDRs subject to the right of the Depository to request certain legal opinions from the Company’s legal counsel in advance of any such exercise in certain limited circumstances.
The Company will provide notice of any meetings where votes will be cast to the Depository. Upon receiving such notice, the Depository will send to IDR Holders a notice (with a requirement under the Deposit Agreement to provide such notice no less than 10 days before the date of the relevant meeting) stating: (i) such information as is contained in the notice provided by the Company to the Depository; (ii) the date by which voting instructions must be received from IDR Holders; (iii) the manner in which such instructions may be given to the Depository; and (iv) how the IDR Holders may instruct the Depository in respect of the Shares represented by that IDR Holders’ IDRs.

Following receipt of such instructions from IDR Holders, the Depository will procure that the Custodian shall appoint the relevant persons as proxies in respect of the Deposited Shares as specified in the instruction provided by IDR Holders to the Depository.  The Depository will not vote or cause to be voted any Deposited.  Shares unless specifically instructed by an IDR Holder. If an IDR Holder does not so instruct the Depository, the votes attaching to the Deposited Shares will be counted as an abstention.

There are practical limitations upon the IDR Holders’ ability to exercise their voting rights due to the additional procedural steps involved in communicating with IDR Holders. Holders of the Shares will receive notice directly from the Company and will be able to exercise their voting rights by either attending the meeting in person or voting by power of attorney. IDR Holders, in contrast, will not receive notice directly from the Company. Rather, in accordance with the Deposit Agreement, the Company will provide the notice to the Depository. The Depository has undertaken, in turn, as soon as practicable thereafter, to forward to the IDR Holders such notices, the voting instructions, if and as received by the Depository from the Company, and a statement as to the manner in which instructions may be given by IDR Holders. To exercise their voting rights, IDR Holders must then
instruct the Depository how to vote the Shares evidenced by the IDRs they hold or instruct the Depository to appoint a proxy. Because of this additional procedural step involving the Depository, the process for the exercise of voting rights may take longer for IDR Holders than for holders of the Shares. IDR Holders may not be able to receive voting materials in time to enable them to return voting instructions to the Depository in a timely manner, and IDRs for which the Depository does not receive timely voting instructions will not be voted.

What happens in the event of a capital reorganisation?
In the event of any change in the par value, sub-division, consolidation or other reclassification of Deposited Shares or any other part of the Deposited Property or upon any reduction of capital or reorganisation, merger or consolidation of the Company, the Depository will give notice of such event to IDR Holders and, in its discretion, may distribute any Shares, cash or other property received from the Company pursuant to such event to the IDR Holders as it would distribute any regular distribution under the Conditions subject, in each case, to the limitations in respect of certain distributions that are not in the form of cash described elsewhere in this section.

Will IDR Holders be able to participate in tender offers, open-market buy-backs or takeover offers relating to the Shares?
In the event that an open-market buy-back, tender offer or takeover offer is made with respect to the Shares, the Depository and the Company will be obliged to take certain reasonable steps to enable IDR Holders to participate in such events in the same manner and to the same extent as holders of the Shares. Such steps will include the submission, at the election of the IDR Holder, of the Deposited Shares represented by the IDRs for purchase to the Company or (in the case of a takeover offer) to the third party acquirer, and the distribution of the proceeds of such sale by the Depository to the IDR Holder in the event that the Deposited Shares are acquired pursuant to the open-market buy-back, tender offer or takeover offer.

Can the Deposited Shares represented by the IDRs be compulsorily acquired?
In the event that, pursuant to a takeover offer or otherwise, any person acquires 90% or more of the Shares, that person is entitled under the UK Companies Act to compulsorily acquire any Shares held by any person, including Deposited Shares represented by IDRs.

What happens if an IDR holding does not represent a whole number of Shares?
The rights of an IDR Holder will in general not be affected. So, for example, IDR Holders will have a proportionate entitlement to cash dividends, IDR Holders will receive all company communications which are sent to its Shareholders and the IDR Holders will be entitled to vote at a general meeting on a show of hands in respect of IDRs representing one Share and on a poll in respect of IDRs representing four Shares. Where IDRs represent less than a whole number of Shares, entitlements to participate in corporate actions, such as rights issues and share distributions will be affected. In these
circumstances, the IDR Holders will receive their proportionate entitlement to any cash amount which may be received by the Depository in respect of the relevant corporate action.

INFORMATION TO BE PROVIDED TO IDR HOLDERS BY THE DEPOSITORY
What notices relating to the IDRs will be provided to IDR Holders and how?
IDR Holders will, in general, receive through the Depository, a copy of all notices given by the Company to its shareholders.  All notices will be mailed to IDR Holders at their respective addresses recorded in the Register maintained by the Registrar and, so long as the IDRs are listed on the BSE and/or the NSE and the rules of such exchanges so require, such notices will also be published in one leading Hindi and one leading English national newspaper in India.

What other information will IDR Holders be sent?
IDR Holders will be sent annual reports, prepared in accordance with the requirements of the IDR Listing Agreement and applicable laws.  In certain circumstances, if permitted by applicable law, IDR Holders may only receive such information in electronic format, including by way of reference to a website where such information will be made available. 

OBLIGATIONS OF IDR HOLDERS
Are IDR Holders required to disclose their ownership of the IDRs?
In certain circumstances, following receipt of a request from the Company or the Depository, IDR Holders may be required to provide information as to the capacity in which they hold or held IDRs and regarding the identity of any other persons then or previously interested in such IDRs and the nature of such interest and various other matters.
In addition, IDR Holders are also required to notify the Company in the event that they hold (whether through the IDR Facility or otherwise) 3% or more of the voting rights attached to the Shares of the Company and also at certain other specified thresholds.

An IDR Holder should be aware that non-compliance with such notification obligations could lead to it being subject to certain sanctions. Accordingly, each IDR Holder is advised to actively monitor all communications received by it at the mailing address recorded in the Register maintained by the Registrar for: (i) any information requests received from the Company or the Depository pursuant to Condition 20.2 and Condition 20.3; and (ii) independently, its obligation to comply with the Disclosure and Transparency Rules as set out in Condition 20.5.

AMENDMENT OF THE TERMS AND CONDITIONS
Can the terms and conditions of the IDRs be altered?
All and any of the terms and conditions of the Deposit Agreement may, at any time, and from time to time, be amended by written agreement between the Company and the Depository, provided that any approval of such regulatory authority as may be required in India, the United Kingdom or Hong Kong which is deemed necessary or desirable is first obtained.
Notice of any such amendment will be given to IDR Holders. Any amendment which increases or imposes fees or charges payable by IDR Holders or which is otherwise materially prejudicial to IDR Holders (as a class) will not become effective until three months after such notice is given to IDR Holders. During this three month period, IDR Holders may withdraw the Deposited Shares represented by their IDRs free of charge but otherwise in accordance with the Conditions. However, please refer above for certain restrictions that apply to the withdrawal of Shares by IDR Holders.  Any IDR Holder who does not withdraw the Deposited Shares during this three month period will be deemed to have approved the relevant amendment and will be bound by such amendment.


DISPUTES IN RELATION TO THE IDRs
How can IDR Holders enforce the obligations of the Depository and the Company?
The Company has executed a Deed Poll which entitles an IDR Holder to enforce any provision(s) of the Deposit Agreement with which the Company fails to comply as if the IDR Holder were a party to the Deposit Agreement and was the Depository. The Deed Poll and the Deposit Agreement are governed by English law. IDR Holders may refer such dispute to arbitration in India in accordance with the Arbitration and Conciliation Act.  Under the terms of issue of the IDRs, the Company, the Depository and IDR Holders from time to time agree that any dispute, controversy, cause of action or proceeding brought by any of them (including, for the avoidance of doubt, any former IDR Holders) arising out of or relating to the Deposited Shares or other Deposited Property, the IDRs or the Deposit Agreement, or any breach
thereof, including any question regarding existence, validity, termination, and any counterclaims that may be related thereto, must be referred to, and finally resolved by, binding arbitration in accordance with the Arbitration and Conciliation Act. Notices in this regard can be sent to the Compliance Officer appointed by the Company.

LIMITATIONS ON THE OBLIGATIONS OF THE COMPANY AND THE DEPOSITORY
Are there any limitations on the obligations and liability of the Company and the Depository?
The Conditions and the Deposit Agreement expressly limit the obligations and liability of the Company and the Depository.  Neither the Company nor the Depository shall incur any liability to an IDR Holder if either of them shall be prevented, delayed or forbidden from doing or performing any act which they are required to perform by reason of (i) any provision of any present laws (save for Indian and English law) or any future applicable law or regulation of any country or of any relevant governmental authority or interpretation thereof; (ii) any future provision of the constitutive documents of the Company; or (iii)  any other circumstances beyond their control.
Further, save in cases of wilful default, negligence or bad faith and, in certain cases, breach of contract, the Depository shall not be liable for (i) exercising or any failure to exercise discretion under the Deposit Agreement; (ii) having accepted as valid or not having rejected any certificate for Shares or any IDR Certificate purporting to be such and subsequently found to be forged or not authentic; (iii) any terms of sale or conversion of any Deposited Property, if required, or if such sale or conversion shall not be possible for any reason; or (iv) any failure to determine that it may be lawful or practicable to make rights available to IDR Holders in general or to any IDR Holder in particular in connection with a rights issue of the Company.

TERMINATION OF THE IDR FACILITY
Under what circumstances may the IDR Facility be terminated (by means of a termination of the Deposit Agreement) and what happens in these circumstances?
There are three circumstances in which the IDR Facility (by means of a termination of the Deposit Agreement) may be terminated and the IDRs consequently delisted: (i) at the option of the Company; (ii) by the Stock Exchanges by reason of a breach by the Company of applicable rules and regulations; or (iii) if the Shares are delisted resulting in such Shares not being listed on any securities exchange in any jurisdiction. Under the Deposit Agreement, the Depository is required to give notice of termination of the IDR  Facility (by means of termination of the Deposit Agreement) to IDR Holders and the consequent delisting of the IDRs under each of the circumstances described above.

In the case of a termination of the Deposit Agreement and consequent de-listing of the IDRs for the reasons described under (i) and (ii) above, there are two alternative ways in which value may be returned to IDR Holders: either (1) each IDR Holder may elect to receive the relevant Deposited Property on payment of any sums payable by the Depository to the Custodian and/or any other expenses incurred by the Depository in connection with such withdrawal (the right to withdraw being subject to certain limitations as described elsewhere in this section); or (2) the Depository will sell the Shares attributable to the relevant IDRs and will deliver the net proceeds of any such sale, together with any other Deposited Property then held by it under the Deposit Agreement, pro rata to the relevant IDR Holders.

In the case of a sale of Shares under (2) above, the Shares will be sold at the prevailing market rate on the London Stock Exchange and the cash distributed to that IDR Holder within 15 Business Days of the completion of the sale of all of the relevant Deposited Property. Neither the Depository, the
Company nor any of their respective agents will be responsible or liable for any loss or damage (whether actual or alleged) arising from the terms of or timing of any sale.  In the case of a termination of the Deposit Agreement and consequent de-listing of the IDRs for the reasons described under (iii) above, the IDR Holders will receive the Shares and other Deposited Property relating to their IDRs on payment by the IDR Holders of any sums payable by the Depository to the Custodian and/or any other expenses incurred by the Depository in connection with such delivery. The mechanism for selling the Shares described above will not be available if the Shares are delisted. In addition, it will not be possible to deliver fractions of a Share; fractions will therefore be disregarded. In all the above circumstances, the IDRs will be cancelled after Deposited Property has been transferred to IDR Holders or, as applicable, sold as described above.

Source:IDR Standard Chartered Offer Document

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